-. REFORM OF PUBLIC PROCUREMENT SYSTEM What is needed for quick introduction of e- procurement system?

Public procurement problems in Post-Soviet countries Non healthy competition Systemic Corruption Non fully implemented reforms Complex bureaucratic procedures High compliance costs Geographical inequality ОКАКУПГОСЗ ЕМА CИСТ

“Paper based” procurement systems are less effective than electronic ones According to the international experience, the introduction of e- procurement system saves at least 10% of the procurement budget due to higher efficiency and transparency For example, public procurement budget of Azerbaijan is around $ 5.7 bln per annum. Every day of non-reforming will cost $ per day

Some advantages of e-Procurement 1. Increased transparency – Everyone Sees Everything Maximum transparency of all procedures. Better mechanisms (including public ) of control over the government spending secure the increased efficiency. Minimization of systemic corruption 2. Increased efficiency due to IT technologies Use of the modern IT solutions, process automatization 3. Savings due to increased competition Openness and increased accessibility of the system promotes greater competition. Average number of participants is increased 4. Wider geography of the suppliers, minimization of “geographical inequality” Geographical distance – no problem any more (one click distance) The future is for e-Procurement

Some countries are better in e-Procurement

Absolute transparency Any document, any information, related to public procurement (annual plans, tender notices, tender documentation, bids, decisions of evaluation committees, contracts and their implementation, payments etc) have to be open and freely accessible online; All tenders – only electronic; Estimated value of the contract is open (argument: closed information is getting corruptive value); Bidder can not submit the bid higher than estimated value of the contract; Documents from state institutions (extract from company registry, tax leniency certificate, certificate on insolvency proceedings, etc.) are required at the end of the procedures and only from the winning bidder; Principle of self declaration Use of e-signature is not mandatory neither for suppliers’ registration, nor for the bid submission Essential decisions, that will ensure successful introduction of e-Procurement in post soviet countries

Reverse auction is part of the tender. Bidders are free to decide whether participate or not. Winner is identified using pass/fail criteria. Sequential evaluation of the lowest bid, i.e. bidders are not evaluated all at once, but the lowest bidder first. If the latter complies with the technical and qualification requirements, he deems to be the winner; Any registered user can request the clarification of tender documents, using electronic Q&A module. The relevant procuring entity is obliged to post the clarification in due time; Any registered user can appeal and freeze any tender, using the electronic appeal module. Tender freeze period shall be minimal (e.g 10 days in Georgia); Critical decisions that will ensure the effectiveness of the reform

System architecture: Georgian model, 2009 Bidding Supplers Database DB Modules Web application

“Roof” for these two Reformer- top person at State Procurement Agency Anti corruption officer – top person at relevant law enforcement body Roof for these two – top person from the Government Тtroika – reform champions

Optimal solution multi platform system, where the database and e-reverse auction module is operated by the state (system administrator), while all other modules (front end) are “de monopolized” and can be developed and operated by private companies The system is cross accessible – the user of platform A can participate in the tender at the platform B and vice versa. This enables private platforms to develop and operate the same or additional services, thus spurring competition between them Advantages of such approach are obvious: Increased competition between e-procurement platforms and their service orientation Single point of access and consolidated data System architecture: Ukraine model concept, 2014

Database Bidding module Private platforms Suppliers Monitoring Business intelligence

Concept of Ukraine e-Procurement system Open source One, common database One, common e-reverse auction module Many user interfaces Interaction through API e-Signature is not mandatory Standard protocols for data exchange Simple, easy to implement solutions MVP – minimum viable product More than 50 IT specialists (architects, analysts and developers), divided into eight thematic working groups) are actively involved in the elaboration of the detailed ToR and development of the pilot e-procurement software. First release of the MVP is ready

Ukraine – innovative development of open source e-Procurement system The development process is fully open Full inclusion of many public and professional IT associations Concept of e-Procurement system development in Ukraine: MoU between the state institutions and public and professional associations on the implementation of the Concept ToR on development of e-Procurement system GitHub Repository and API

მადლობა Tato Urjumelashvili